The Maceda Law (RA 6552) – Read the full text and know your rights…

Do you want to know your rights as a real estate investor, or simply as a real estate buyer who is making installment payments?

The first logical step would be to know what law applies and what that particular law contains, which in this case would be the full text of Republic Act No. 6552, which is more popularly known as the Maceda Law.

REPUBLIC ACT NO. 6552

REALTY INSTALLMENT BUYER PROTECTION ACT

AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON INSTALLMENT PAYMENTS

Section 1. This Act shall be known as the “Realty Installment Buyer Act.”

Sec. 2. It is hereby declared a public policy to protect buyers of real estate on installment payments against onerous and oppressive conditions.

Sec. 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine, where the buyer has paid at least two years of installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer only once in every five years of the life of the contract and its extensions, if any.

(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.

Sec. 4. In case where less than two years of installments were paid, the seller shall give the buyer a grace period of not less than sixty days from the date the installment became due.

If the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act.

Sec. 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same to another person or to reinstate the contract by updating the account during the grace period and before actual cancellation of the contract. The deed of sale or assignment shall be done by notarial act.

Sec. 6. The buyer shall have the right to pay in advance any installment or the full unpaid balance of the purchase price any time without interest and to have such full payment of the purchase price annotated in the certificate of title covering the property.

Sec. 7. Any stipulation in any contract hereafter entered into contrary to the provisions of Sections 3, 4, 5 and 6, shall be null and void.

Sec. 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall be affected thereby.

Sec. 9. This Act shall take effect upon its approval.

Approved: August 26, 1972

Up next: Maceda Law salient features

Of course, this post will not be complete without covering the salient features of the Maceda Law. This will be covered in the next part of this series. Please watch for it.

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About Jay Castillo

Jay is the founder of Foreclosurephilippines.com where he shares real estate investing tips and foreclosed property listings. He quit his job as an I.T. Manager to focus on Real Estate Investing and Internet Marketing. He is a PRC licensed Real Estate Broker (REB License # 3194)... [Read more]

Hi Sir, I would just like to ask re the Maceda Law? When you say at least 2 years of installment, what does it mean? I purchased a house and lot and paid an outright 10% dp, then remaining 10% in just 6 months. Now I am in my monthly amortization stage for 3 months but there has been some change in priorities so I intend to give up the house. Can my situation qualify for a refund in the Maceda Law or not? Thank you so much!

Sir, good Day! I would just like to have an expert advice, if me and my other three siblings have the right to refund our money from our developer AVIDA, if we believe we have been misinformed. Last November 2012, we were approached by an agent from AVIDA and were offered to purchase a unit at Nuvali. After seeing the unit we were amazed and have interest in investing for our family. We were asked to make a reservation fee of 10K each, but before we paid the reservation, we asked them first if our current income is enough to be approved by the bank, secondly we also asked them to send us computation of the monthly amortization just to know if we have the capacity to pay the amortization before we pay the reservation, they replied and this was documented thru email. At first they have given us computation of an 20 / 80 scheme were we have to pay 20% and the 80% will be loaned at the bank. From their computation, we told them that we have no savings to pay the 20% down payment, so we told them that we cannot continue to purchase the unit. they have offered us another scheme which is 5 / 95 wherein the 5% is payable in 6 months. they also gave us copy of computation for the monthly amortization coming from PNB the bank who will offer us the loan. base on the computation, we have to pay 14K for the first 6 months which is the down payment for the 5% then 12k monthly from the 7th month till we finish the payment of amortization until the 20th year. Base on the computation they have shown us, we were encouraged to pursue our dream, we made the down payment of 10K then immediately issued them PDC of 14k for 6 months from December to May. the checks were all good and have no problem and they were able to collect it but after the 5th month,we were advised that the bank has made a mistake in giving us the computation, not included on the computation were the processing fee of 45 k outright cash and other fees. WE WERE NOT TOLD ABOUT THESE. AVIDA then gave us another computation, but base on the computation we now have to pay 22 k monthly for the first three years which is too much and we believe is not anymore feasible against our income. we only decided to invest and paid the reservation fee and issued PDC’s because what we know is that that we will only pay 12k for the monthly amortization. We went to AVIDA office in Alabang and had a meeting with them and we were told that it was a bank error. they told us that they will help us. More sadly we had advised AVIDA that we will hold the 6th month check payment until the issue is settled and were given reference numbers conforming the holding of checks. Giving us more burden they have deposited the checks and all checks bounces. THE Y ARE NOT PROFESSIONALS IN ALL DEALINGS. My two sisters who were a doctor and a dentist, me and my other brother who were both professional on our fields feel that we have been scammed. Also, I dont know how the bank approved our loans if my two sisters and I have problem with our documents, wherein my 2 sisters both separated from their husband but not legally but still they approved it that they knowing it that my sisters will be having problem with their papers, and I have credit issues on my credit card We now would like to ask for your expert advice if we have the chance to refund our hard earned money which now is 80K collected from each and one of us. Hope to hear from you the soonest. Thanks in advance!!!

I would just like to inquire if the closing fees are included in the maceda law. I already paid for the closing fees which are only due on its turnover date but chose to pay it on installment. Will I get the 100% of such closing fees upon cancellation or also 50%?

Another thing, my unit is due for turnover last January 2013, but they only dressed up the unit this April. Will the computation of penalties start on January 2013 or after the acceptance of the unit?

Its not Buyer Protection Act its name should be Buyer Humiliation Act as its protect the Developer only and its says buyer will get 50% of his/her hard earning money back. Its out dated and anti buyer law. Real Estate prices most of time go up not down so why should developer refund 50% of buyers payment while developer charge huge upto 24% interest if buyer didnt pay its payment on time. All buyer should fight against this law which give right to developer to humiliate the buyers. If someone not paid then that unit developer never sale in 50% down payment so why refund is 50%.

Hi Jay, We arrangedthe purcahse of a unit at Mezza Residences, SMDC Sta Mesa in January 2012 and gave a downpayment of 1.8 but filed for a loan for the payment of the rest of the amount payable in 10 years. By March 2012 we learned that our loan application was disapproved so we immediately downgraded to a 2 bedroom unit costing 4.6m. Upon downgrading, we paid an additional amount of 500k so the downpayment now went up to 2.3 but up to now hindi pa na=a award sa amin ang unit. Last February they informed us that the former Copntract for Unit 3805 was already cancelled and processing of papaers for the new unit 3711 is on-going. Pero sobrang tagal na tagal na. Mag isang taon na. Gusto na naming mag-back out sa pagbili. Walang consideration, insensitive and SMDC< Enta pa rin kami ng renta. KUng ituloy namin ang plano naming hindi na bumili and with the Cancellation that we both agreed on, pwede ba naming makuha ang buong amount? Noong October pinagbayad kami ng reduced penalty na 117,000.00 sa mga delays na hindi kami ang may kagagawan. Please reply ASAP. THANKS. Gustong gusto ko ng mag back out sa "SLOW COMPANY NA ITO."

I bought a condo but the unit will be turned-over by June only. I had only paid 9 months and I cannot continue anymore for financial reasons. I already informed the realtor about my situation even before my payments will be delayed and requested for a refund. Is it true that I cannot refund anymore? We have not used the unit yet as it is not ready for occupancy yet.

I’m a first-time buyer po ng isang house and lot. Ready for occupancy po ang nakuha kong unit. I requested for the removal of the balloon payment since hindi ko po sya kayang bayaran ngayong taon. Only then I was made aware that the property I bought was a foreclosed property – hindi po nakasaad sa contract to sell ko yun, may habol po ba ako sa developer ko?

Sabi po ng nakausap ko from their head office maccharge daw po ako ng 3% interest pag hindi ko nabayaran ang balloon payment ngayong taon (payable in 3 years). Pero I sent my request 6 months ago and until now wala pa din silang ginagawang action and the status of my request is still for approval ng bank. I understand that it takes awhile before getting a response from the bank (let’s say alam ko na foreclosed yun property) pero the request was sent ahead of time, will I still be liable for the penalty?

Hoping for your response.

Thanks, Lisa

P.S. I find your website very informative and helpful especially for first-time buyers like me. Thank you and more power!

I just received the notice of cancellation from the seller of my condo unit today. The letter was dated October 8, 2012 and notarized on October 9, 2012. The mail envelope has the date of October 30, 2012 stamped by our city post office but I didn’t receive it until October 31, 2012 (today). The cancellation notice is due to my arrears in payments which amounts to 12 months of non-payments. I have decided to just opt for the cancellation since I no longer have the ability to make payments anymore. The notice says that they recognizes the Maceda Law that I should get a refund of the installments I’ve paid (more than 2 years of amortization and full down payment) but they also stated there that I have an obligation to pay the delinquent amount. Since I am agreeing to cancel the contract, would I still be liable for the unpaid amortization and penalties with interest? Would I be entitled for the 50% refund as per Maceda Law?

Kindly asking, does Maceda Law still apply if the developer has not issued a contact to sell yet?

My case po is that I invested in a condo unit and parking last February 2012 and have been paying for around 7mos already amounting to more or less P100k as of this date. Due to some financial difficulties & change in priorities I am contemplating if in case I decide to stop with the investment, will I be able to refund my money? how much? The developer told me that I won’t be able to refund anything despite the fact that there is still no contract to sell yet….

Just want to know my stand so that I would come up with the best decision. Some people around me told me that I can even pursue my situation thru the “small claims law”..is that possible and if in case I pursue such action, will it be worth it?

hope you can give me some tips on my situation. thank you Sir for sharing your time and expertise.

I bought a townhouse sa Profriends last 2009. Sad to say, I got fired from my job hence, I could no longer pay my succeeding monthly amortizations. Under sa Maced Law, dapat entitled po aku sa 50% refund, right? because until now I’m still paying for it. I called their office and the staff said that I’m not entitled sa refund since they only grant refunds daw if my fault ang company, and not because sa arrears or difficulties of the buyer to pay.

But I read the Maceda Law many times, and it indicated that I’m entitled to it, right? Regardless of the reason–since it’s my money anyway and no one is above the law.

Yes, selling through a Deed of Sale or a Deed of Assignment would be another option (covered yan ng Maceda law, please see section 5 above), just make sure how much the assignment fee would be, if any. For other developers, it can be as low as Php10K to as high as Php100K. Less hassle nga yon kesa magkakaso pa, in my opinion.

Hi Amidala, if you are able to establish that you have been paying for at least 2 years, the 50% refund is the least you can get based on the maceda law. But if you want to refund the whole amount because of issues with the developer, I suggest that you check with HLURB if there are grounds for a full refund. You can contact HLURB directly by consulting with the Legal Services Group at the HLURB Central Office in Kalayaan Ave., cor. Mayaman St., Diliman, Quezon City or call them at 924-3367/927-2697/920-8749.

Amidala

Thank you very much!

http://www.foreclosurephilippines.com Jay Castillo

You’re welcome!

maryann

sir last thing po do u have other no. i cant connect to the no. that uve given me, and i cant send an email either. tnx

http://www.foreclosurephilippines.com Jay Castillo

Hi Ms. Maryann, will check if there’s another number and get back to you…

hi. purchased a condo on jan 2011: paid the reservation fee (P20T) on jan 2011; P185T – 5% DP on feb 2011; then from march 2011 to dec 2012 paid the installments (15% divided by 24 months – P25T per month). Will I qualify under Maceda Law if I will not to continue with the monthly amortization starting january 2013? Many thanks in advance for your help.

anoche

hi. purchased a condo on jan 2011: paid the reservation fee (P20T) on jan 2011; P185T – 5% DP on feb 2011; then from march 2011 to dec 2012 paid the installments (15% divided by 24 months – P25T per month). Will I qualify under Maceda Law if I will not to continue with the monthly amortization starting january 2013? Many thanks in advance for your help.

Hi LJ, I believe if a housing loan is done through a mortgage contract, considered fully paid na yung purchase ng property dahil may deed of absolute sale na, what’s being paid for is the loan with the bank loan. Other housing loans done through a contract-to-sell should still be covered by the maceda law.

We acquired a lot on Feb 20, 2010. We started paying the 6monthly installment on downpayment on March 20, 2010 and started paying the monthly amortization on Sept. 20, 2010. However, we defaulted on our monthly amortization last Feb. 20, 2012. My question is, how many months do we still have to pay in order for us to qualify for a refund of 50% according to the Maceda Law – RA6552?

i guess yes kasi in Section 7 it states that any contract contrary to section 3-7 will be considered null and void…so meaning yung contract na nakalagay na you cant refund is void kasi it is also our rights as buyers to protect ourselves from developers. So any developers shouldnt claim any immunity to the law. So dapat makukuha mo parin ang 50% refund no matter what kaya nga ginawa ang batas na yan.

http://www.foreclosurephilippines.com Jay Castillo

I agree, thanks!

renren

please post now the salient features of maceda law and recto law..please..

http://realestate.sulit.com.ph/ ian

nice job on posting thanks its a good information for real estate buyers/investors

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Hi, I'm Jay Castillo, a full time real estate investor, real estate broker, and internet marketing practitioner.I started foreclosurephilippines.com in 2008 as a tool where I keep all of my listings of foreclosed properties and lessons learned about real estate investing in the Philippines.No, I am not a "guru", I can only share what I have learned based on my own experience. Click here to read more...